Brazil Inflation March 2016

Brazil: Inflation eases to 9-month low

April 8, 2016

Consumer prices in March increased 0.43% over the previous month. The print was below the 0.90% increase recorded in February and slightly better than market analysts’ expectations. The easing was mainly driven by falling prices for housing as well as a smaller rise in prices for education compared to the previous month. In contrast, prices for food and beverages rose at a faster pace.

Inflation in March eased to 9.4% from February’s 10.4%, which marked the lowest level since June 2015. The easing in price pressures comes after a number of hikes in the Central Bank’s SELIC rate in 2015 and a backdrop of recession. In addition, the effect of a number of price adjustments is beginning to fade. Despite the fall, inflation remains far above the Central Bank’s tolerance margin of plus/minus 2.0 percentage points around 4.5%.

Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2016 at 7.1%, which is down 0.1 percentage points from last month’s forecast. For 2017, the panel expects inflation of 5.5%.

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Brazil Economic News

At its 11–12 December meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Política Monetária, COPOM) unanimously decided to keep the benchmark SELIC interest rate at its record low of 6.50%.

Brazil’s current account balance came in at a surplus of USD 329 million in October, contrasting the USD 686 million deficit recorded in the same month last year.
The current account surplus was chiefly due to a higher trade surplus, which came in at USD 5.9 billion in October (October 2017: USD 5.2 billion).

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